Hope for Gove with Rio Tinto to keep refinery

The Northern Territory Government announced Rio Tinto's decision in Parliament this morning, saying it will now proceed to finalising the release of gas as soon as possible.

"From here, a number of steps now need to be followed - first it's the Commonwealth that needs to ensure the underwriting of the gas pipeline," Chief Minister Terry Mills said.

"The second aspect is the finalising of commercial arrangements of gas supply, the third is environmental and land access clearances."

Anxiety was running high in the East Arnhem town of 4000 - where almost half the population is employed at the refinery - after Rio Tino threatened to close the operation if the Government did not secure a gas supply to reduce its operating costs.

An announcement on Monday that the Government would secure a gas supply to Gove in order to meet Rio Tinto's demands was followed by two days of anticipation for the town, waiting for the mining giant's response.

East Arnhem Chamber of Commerce president Dave Suter said the result was a win-win for everyone involved.

"It's been some very trying times for the businesses and people in the region with having this uncertainty hanging over our heads," he said.

"One thing we can say for the NT Government is now they are looking strongly at the energy futures of the Northern Territory which has been a long time coming."

The pipeline construction is expected to cost $500m and a further $500m will be spent in infrastructure upgrades to allow Eni to flow gas from Blacktip to Gove.

Converting the refinery generators from oil to gas will cost a further $200million for Pacific Aluminium.

"The Commonwealth Government has shown its support for the Northern Territory Government's decision to release gas to Rio Tinto, and must now follow through on their commitment to underwrite the financing of a gas pipeline to Gove," Mr Mills said.

"This signals the beginning of new opportunities for the Northern Territory with more than 700 new jobs to be created and a significant injection into the Territory economy.

"Today's decision has secured the future of Gove and will allow its community to look-ahead with certainty."

Mr Mills said the Government would continue to drive the agenda for a the Territory to be connected to a national pipeline grid.

Pacific Aluminum CEO Sandeep Biswas said there is still a great deal of work needed to deliver gas to Gove.

A meeting with Pacific Aluminium employees has just been held in Gove, and ABC Local Radio reporter Miranda Tetlow reported the workers departing with smiles and great relief over the decision.